Are you in the top 10 percent of income earners?

If you want to be in the top 10 percent of New Zealand wage and salary earners, you need make at least $135,000 a year.

If you want to squeeze in to the top 1 percent, you'll need a salary of about $290,000.

Inland Revenue's latest income data shows the threshold for the top 10 percent has increased from about $100,000 in 2020, based on PAYE data on wage and salary income, and including people with part-time and part-year earning.

Some earn much more than the top 1 percent figure - 980 people were recorded as having income of at least $1 million. That's more than twice as many recorded at that level in 2019.

The top 10 percent of earners received about $57.9 billion of wage and salary income out of $199.7 billion in total, or about 29 percent of all wage and salary income. The bottom decile received only about $768 million or 0.4 percent.

Simplicity chief economist Shamubeel Eaqub said higher income earners had generally not experienced wage increases that kept up with inflation since 2019.

"For the bottom half of income earners, real incomes have increased, and particularly for people in that $60,000 to about $100,000. That's where the biggest growth has been.

"When you're earning a million dollars, even a 20 percent increase is quite a lot, but in real terms, they've had no increase. That's why, if you look at that share of income at the top 1 percent, it hasn't gotten that much bigger.

"It has, in fact, shrunk a little bit."

He said the number earning "megabucks" was relatively small in the context of the number of people working in New Zealand.

Otago University economics Murat Ungor said the wage and salary income distribution had narrowed between 2019-2026.

"Nominal income at the 10th percentile rose by about 60 percent and at the 25th percentile by about 61 percent, compared with 46 percent at the median and 39 percent at the 90th percentile. Prices rose by about 30.5 percent over the period.

"In real terms, the ranking holds, but the gains are much smaller, roughly 23 percent at the 10th and 25th percentiles, 11-12 percent at the median, 7 percent at the 90th percentile and slightly negative at the 99th percentile."

He said minimum wage rising from $16.50 to $23.50 might have helped bump up the earnings of those at the lower end of the scale, as would the tight labour market of 2021 and 2022.

"The figures need careful interpretation. They are percentiles of wage earners in each year, not the same individuals followed over time.

"They measure annual PAYE-reported wage and salary income, not hourly pay. The bottom 10th includes young people with part-time jobs, casual workers and people employed for only part of the year.

"An annual income of $6880 is equivalent to approximately seven weeks of full-time work at the current minimum wage of $23.50 per hour. Therefore, growth at the bottom reflects hours worked and time in employment, as well as changes in hourly pay.

"The number of people earning under $10,000 also fell by about 114,000, while the total number of earners increased. This change in composition can mechanically push up the 10th percentile."

He said, in 2019 dollars, the real gains were about $1000 at the 10th percentile, $4900 at the median and $6400 at the 90th percentile, while real income at the 99th percentile fell by about $1900.

"Relative compression does not necessarily mean lower earners are catching up in dollar terms, at least up to the 90th percentile.

"The data also tell us little about the full income of people at the top. Some shareholder-employee salaries paid without PAYE deductions, as well as income retained within companies and trusts, are not captured in these wage and salary figures.

"The 39 percent top marginal tax rate introduced in 2021 may also have encouraged some changes in how high earners receive their income, although more evidence would be needed to establish the extent of this effect."

The percentiles

10: $6880

20: $19,376

30: $35,007

40: $50,111

50: $61,958

60: $72,723

70: $85,546

80: $103,897

90: $134,568

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